Race-based car loans? The use of disparate impact theory by Consumer Protection Bur.

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Remember the housing bubble and the predatory lending practices that led to it? Remember the government policy that spawned all that: increasing home ownership to those who were bad credit risks under the guise of civil rights? It seems we're there again.

[T]he new Consumer Financial Protection Bureau [CFPB] is ginning up a campaign to use “disparate impact” analysis to charge racism in auto lending. That’s the theory that looks at statistics to prove bias without evidence of specific discriminatory intent. Never mind the financial or other circumstances of the borrowers beyond their race...

...Patrice Ficklin, head of the bureau’s Office of Fair Lending and Equal Opportunity, revealed that “we have found substantial and statistically significant disparities between the interest rates paid by African American, Hispanic, and Asian car buyers when compared to the interest rates paid by white car buyers with similar credit scores and other factors...

[The CFPB] hasn’t published its research in detail and has instead proceeded to mount a political pressure campaign to remove dealer discretion in setting loan terms. “Guidance” from the agency sent to banks in March included advice on how to avoid running afoul of anti-discrimination laws in auto lending.

Message received. The banks that provide financing for the dealers began warning dealers to improve compliance or risk having flat fees imposed. In other words, the dealers’ profits on loans would be capped...

...CFPB chief Richard Cordray responded to a question on the bureau’s methodology this week at the Senate Banking Committee. “I want to be a little careful about talking about what we have found, because this is an ongoing investigatory effort where we’re working with the Justice Department....

“So the order of the day on those things is confidentiality unless or until you get to the point of taking some sort of public action, and so I want to be a little careful about not breaching that.”

“Careful” is an interesting way for Mr. Cordray to describe what he’s doing. It sounds like he wants to proceed with sentencing before anyone knows whether there will even be a trial....